Economic Development in China in the 1950s - Research Proposal Example

The Process of Economic Development in China in 1950s. Research Proposal of the Research: The Process of Economic Development in China in 1950s. 2. Background China’s economic restoration begun in 1949 when government administration stepped up to repair transport and communication systems and attempted to revive normal flow of the economy after it suffered great damages during the World War 2. In order to bring inflation under control, the government established People’s Bank of China meant to unify monetary system, control credit, restrict government budget and safeguard value of China’s currency. Similarly, China’s agriculture sector was at stake until government intervened in 1949 to restore it back to its position before the war broke. Suppose the government never intervened quickly to downsize the amount of technical imports and replace them with importation of grains more deaths could have occurred. Soviet economic model and Socialist economic system implemented around 1950s, have bearing on the current status of China’s economy, politics and society at large. However, Socialist economic system proved beneficial than Soviet economic model. This research work analyzes economic development in China around 1950s and factors that led to the decline of the same. Economic development underwent through three major phases; Recovery from War, First-Five Year Plan and Great Leap Forward. 2.1 Recovery from War Development of China’s economy underwent through series of phases from 1949 to 1960, which included major transformations in various fields like agriculture, industries and military. Phase one was the Recovery from War that commenced in 1949 to 1952 with the aim of recovering China from debilitating effects from the war. Moreover, communication and transport system had been neglected during the war and with time they got tattered due to lack of maintenance. Additionally, the agricultural sector had declined a great deal from the pre-war level (Chow 362). Furthermore, China’s economy suffered one of the toughest inflation ever in world history because of lacking proper measures to control the monetary system. Consequently, the government of China decided to synchronize to centralize financial market structures in a bid to put inflation under control. The greatest change during this phase was change of landownership in the country as a means of enhancing equality to all citizens regardless of their income level. Through nationwide land reform program, arable land formally belonging to rich people was distributed to families that formally owned little or no land. Consequently, close to 40 percent of farming land in China belonged to mutual trade teams in 1952 which helped improve agriculture at a very high speed (Donnithorne 39). By the end of the year 1952, agriculture and industries had regained their normalcy as before occurrence of the war while prices and commerce had started to stabilize marking end of Recovery from War after achievement of the desired goals. 2.2 First Five-Year plan The second phase, First Five-Year plan begun immediately after restoration of economy during the preceding phase whereby, leaders led by Mao Zedong and Zhou Enlai and other veteran leaders were embarking on improving industrialization and increasing socialization. After China established People’s Republic in 1949, China’s greatest aim was to reorganize her Science system by adapting to Soviet line system that lasted until the late 1970s. However, after Chinese Communist leader Mao Zedong led in the formation of People’s Republic of China in 1949, United States suspended diplomatic ties with China for some decades. Their aim was to disrupt and destabilize China’s communist government. They believed that China could possibly expand and gain power that could threaten security of noncommunist neighboring nations. United States created an off-shore line of military alliance with Japan, South Korea and Nationalist government in Taiwan. Additionally, United Stated stationed a number of troops in the above countries and urged their allies to refrain trade with China. However, despite these difficulties, China decided to side by Soviet Union as they practiced communist governance (Bernstein and Li 131). This even led to split between United States and Soviet Union and refrained to cooperate in trade and military. As a result, China adapted to Soviet line system which enabled them develops a well-established science and technology base that would enable her compete with industrial developed nations. In order to grow along Soviet lines, Chinese Academy of Science borrowed ideas from Soviet Academy of Science whereby, they obtained ideas on how to establish their own science department. However, during this period, China exchanged large number of personnel with Soviet Union in order for them to learn how to set up their own science base. Close to 38,000 Chinese were sent to Soviet Union for training and to study; whereby most of them were technicians from various industries and they accompanied by students, college tutors and postgraduate scientists (Mathur and Deng 34). Similarly, Soviet Union dispatched their personnel to China’s industries with the aim of injecting new knowledge among Chinese who worked in Science and Technology departments. Conversely, personnel from China left to Soviet Union to study how their counterpart’s science departments work in order to apply the knowledge in home based industries (Mark 7). First Five-Year Plan was credited for enhancing economic growth especially in sectors those adopted to Soviet strategies of development. Following implementation of the suggested Soviet development strategies, a strong foundation was established among various industries such as coal, steel, iron, cement production and electricity generation. Due to the above industrial advancement, industrialization and mining sectors experienced 19 percent annual growth rate starting from 1952 to 1957, which consequently resulted to 9 percent increase in national income annually (Zhang 4). 2.3 Great Leap Forward However, much interest was emphasized on agriculture in a bid to enhance and promote higher productivity similar to what was produced in the industrial sector. Nevertheless, households had overwhelming challenge of their inability to obtain capital to invest in both agriculture and industries. However, formation of these small rural based industries enabled production of machineries required in agriculture sector as well as some basic components required by urban industries (Meisner 465). With this approach, capital creation was enhanced to both those living in urban and rural areas; thus, stimulating overall economic growth. Improvement of agricultural efficiency and mobilization of rural labor was enhanced by abandoning collectivization strategy and instead adopting to people’s communes (Shen and Xia 873). Unfortunately, instead of Great Leap Forward boosting the economy, it brought economic crisis that almost led to the collapse of agricultural sector; however, industrial sector grew by a significant percentage. Besides, in 1959 and 1960, the country experienced adverse weather conditions destroying all the improperly constructed water reserves. The transition from communization led to misallocation of resources leading to massive decline in agricultural domain. Notably, from1952 to 1953, national income decreased from 10.9 percent to 4.3 percent while in 1957 it recorded an additional 2 percent decline (Milanovic 193). However, the decline ceased starting from 1960 following government efforts to eradicate increased famine in the country. Additionally, famine led to increase in death rate during the Great Leap Forward until when government adopted to a policy of importing grains to feed starving population. Close to 20 million people were purported to have died of starvation from 1958 to 1960 (Wu 2). 2.4. Impact of politics on China’s economy in 1950s In 1950s, China saw radical social transformation whereby, they abandoned capitalist governance for communism. The aim of communism was to enhance equality in all social classes regardless of level of income. However, most communist were illiterate peasants and non-professionals, although some were educated especially the middle class people and leaders. Nevertheless, both the Communists and Capitalist allied to fight against Japanese, Nationalists, and the Republican Chinese government during the Pacific World War 2 whereby, they took authority over them. After People’s Republic of China came to power in 1949, China saw major transformation in science and technology sectors. Leaders of People’s Republic of China collaborated with Soviet Union whereby, they developed their industries along those of Soviet Union. Consequently, industrialization and agriculture intensified due to increased research conducted by science department in collaboration with technology department thus; fostering economic growth in China in 1950s. 2.5. China’s economic development in 1950s and its current economic development During 1949-1960, China devoted much of her resources on industrialization as a means of strengthening economy. Mao’s government emphasized on reviving tiny industry sectors those weakened and collapsed during World War 2. Moreover, new industrial domains such as automobile, electricity generation, aircraft manufacturing, mining and steel industries were established in order to improve China’s economy. China’s globalization with Africa and Europe in 1950s enabled them increase industrial products sales. With this, China’s industries expanded a great deal because of availability of wider market. Currently, China is the fourth largest economic country in the world and is expected to surpass economic superpowers, United States by 2019; if the rate of economic growth remains constant at 10 percent annually. 3. Goal of the research: “To evaluate the economic models, which were adopted during 1950s for the purpose of rapid economic growth of China and identify the impacts of these models and transition phases on the Chinese Economy?” The Goal of the research is not to only study the history of Chinese economy since 1949 but to also to critically evaluate the process of development while analyzing the impacts of development on China’s economic growth. Moreover, the study is aimed at formulating the generalized economic model which will prove to be most suitable to achieve rapid economic growth. No doubt, the economic model cannot be generalized because the dynamics of each economy is considerably different. Therefore, the research work will be precisely focused on the dynamics of the economy that matches with the Chinese economy. 4. Thesis Statement: The implementation of Socialist economic system was proved to be more fruitful than the Soviet economic model. The research work is based on identifying factors that led to the failure of economic development process over the period 1949-1960 and its impact on China’s current economic growth. 5. Research question 1. How the process of economic development took place? 2. Identify whether the Economic Development and Chinese Economic Growth were related to each other or not? 3. If the relationship exists then identify whether the relationship between the Chinese Economic Growth and Economic Development Process is significant or not? 6. Limitations 1. Research is carried out in unnatural environment therefore do not reflect real world results. 2. Likelihood of bias and misrepresentation because data reflects view of researchers instead of participating subjects. 3. Results provide numerical data only rather than detailed narrative. 7. Outline of the Research The Research report will comprise of the following Sections: 7.1 Introduction Section: The Section of the research report discusses the background, goal of the research, Research questions and limitations 7.2 Literature review The second section of the research report will be based on the review of the literature discussions of tentative sources that will be used in the research work as follows; Bernstein and Li (2011) in his book on “China Learns from the Soviet Union 1949-present” identified the impacts of Sino-Soviet relationship on the economy of China. Focuses on the economic development process and the writer has found the traces of those process in the current Chinese economy. Chow (2015) in his book on “China’s economic transformation” provides a comprehensive analysis, theoretical and institutional factors that have led to China’s economic success. The writer Focuses on recent economic growth and obstacles that hinders the same. China’s economic relationship with the international market will also be discussed in the literature review section by reviewing the book on “China & the World Since 1945” (Mark 2013). The book also discusses the different periods of economic development of China but the additional factor which is discussed in the book is the analysis of international relationship of China with major economies of the world. The book named as “China’s Economic System” (Donnithorne 2013) describes the operation of China’s economy. The writer shows how China’s economic life is decentralized and how it is self-sufficient within provinces and smaller administrative units. Mathur and Deng (2007) in their book on “Educational reform in post-Mao China” Focuses in the reforms of China’s education system under Deng Xiaoping. It vividly indicates how reform on the education has significance impact on the economy and culture. Meisner (1999) in his book on “Maos China and After: A History of the Peoples Republic, Third Edition” provides a comprehensive and a piercing insight on how China’s economy is in turbulence. The country experiences unstable relationship with socialism, democracy and capitalism. The book named as “Worlds Apart: Measuring International and Global Inequality” (Milanovic 2008) shows how to assess global disparity among individuals, and evidently reveals that inequality is caused by multifaceted forces that come from various directions. Data about household earnings is used to analyze income contribution across the country. Zhihua and Xia (2011) in their journal on "The Great Leap Forward, the Peoples Commune and the Sino-Soviet Split." Discuss the actual divergence between China and Soviet on the Great Leap Forward and the People’s Communes. Divergence between Mao and Khrushchev on People’s Communes and Great Leap Forward leads to Sino-Soviet split. The book named as “Population policy and human capital accumulation in China” (Wu 2008) discusses the policy of One-Child in China and assesses its effect on the creation capital. It shows impact that children have on their parents; measures of health like body weight are used to analyze extent to which children influence their parents’ ability to accumulate capital Zhang (2014) in his book on” Enterprise management control systems in China” Examines integration of China’s cultural practices, business regulations and forms of management. Economic reforms in China influences different forms of management control. 7.3 Research Methodology In order to answer the research questions, the most appropriate research methodology, which will be adopted, is the quantitative analysis using the economic indicators of the 1950s in China and their impacts on GDP growth, which will be used as the proxy for economic growth. The multiple regression analysis along with correlation analysis between the economic growth and other economic indicators that will define the economic policies of the government during the period of 1950s will be used. The data will be collected from the database of World Bank and Peoples republic of China. 7.4 Data Analysis: The section of the report will use the data, which will be retrieved from the database of World Bank and Peoples republic of China. The section shows the regression and correlation results. 7.5 Conclusion and Recommendations In conclusion, in order for China to restore its economy in the previous position before war broke, it established Recovery from War, First Five-Year Plan and Great Leap Forward phases of economic development aiming at enhancing industrialization and improving agriculture. During the Recovery from War phase, major changes were carried on transport and communication systems since they had been destroyed during the war. Additionally, government attempted to stabilize prices and strengthening the local currency as a way of reinforcing economy back to current position before outbreak of war. Ultimately, China’s government should have put equal emphasis on agriculture and industrialization since they both played an important role in strengthening the economy. Works cited Bernstein, Thomas P and Hua-Yu Li. China learns from the Soviet Union, 1949-present. Lanham, Md: Lexington Books, 2011. Print. Chow, Gregory. Chinas economic transformation. Hoboken : Wiley-Blackwell, 2015. Print. Donnithorne, Audrey. Chinas Economic System. London: Routledge, 2013. Print. Mark, Chi-Kwan. China & the World Since 1945. London: Routledge, 2013. Print. Mathur, Nalini, and Xiaoping Deng. Educational reform in post-Mao China. New Dehli: A.P.H. Publishing Corporation, 2007. Print. Meisner,Maurice. Maos China and After: A History of the Peoples Republic, Third Edition. New York NY: Simon and Schuster, 1999. Print. Milanovic, Branko. 2008. Worlds Apart Measuring International and Global Inequality. Princeton: Princeton University Press. Print. Shen, Zhihua and Yafeng Xia. "The Great Leap Forward, the Peoples Commune and the Sino-Soviet Split." Journal of Contemporary China 20 (2011): 861-880. Print. Wu, Xiaoyu. Population policy and human capital accumulation in China. College Park: University of Maryland, 2008. Print. Zhang, Xianzhi. Enterprise management control systems in China. Heidelberg : Springer, 2014. Print. Read More